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Careful What You Say About Competitors

An agent who never wants to work with a specific listing broker again gave a seller their honest assessment – and the broker filed an ethics complaint. How is it a violation to give a seller honest advice?

ORLANDO, Fla. – Dear Shannon: Last year, a listing broker refused to pay my requested compensation. This year, a seller asked me about that broker after I explained I’m only a buyer’s agent and couldn’t represent them. But I also told this seller that, in my experience, this broker refused to cooperate with me, and I’m not sure I could work with them again. I said that if they treat other Realtors the way they treated me – and I assumed they did – I may not be the only Realtor who feels this way.

The listing broker found out what I said and within hours filed an ethics complaint against me. He accused me of violating of the Code of Ethics for making false and misleading statements about him.

But when this broker didn’t pay my earned compensation last year, they didn’t cooperate with me. I was trying to protect this homeowner by giving them my true assessment of the other Realtor. How is it a violation for me to tell a seller what I think? – Whiplash

Dear Whiplash: Thank you for reaching out. I hear that you were trying to protect the homeowner, and that you were just giving them your honest assessment of this other Realtor.

However, it sounds like you don’t understand the difference between cooperation vs. compensation. Because of this misunderstanding, you made false or, at the very least, misleading statements, which spells potential trouble under the Code of Ethics.

Let’s look at what the Code says about the difference between cooperation vs. compensation, and the section of the Code that addresses false or misleading statements about other Realtors.

Article 3 states: Realtors® shall cooperate with other brokers except when cooperation is not in the client’s best interest. The obligation to cooperate does not include the obligation to share commissions, fees, or to otherwise compensate another broker. (Amended 1/95)

Notice that cooperation and compensation are not synonymous, and that the obligation to cooperate is distinct from the obligation to compensate another broker.

In fact, Standard of Practice 3-10 says The duty to cooperate established in Article 3 relates to the obligation to share information on listed property, and to make property available to other brokers for showing to prospective purchasers/tenants when it is in the best interests of sellers/ landlords. (Adopted 1/11)

Remember Standards of Practice serve to clarify the ethical obligations imposed by various Articles. If you’ve worked with a buyer for some time and they submitted an offer on this other Realtor’s listing, it’s logical to infer that this included getting information from this other Realtor. By sharing information with you about the property and making it available to show to a buyer, the other Realtor cooperated with you.

However, it sounds like you had a genuine commission disagreement as a result of this transaction. You were in a procuring cause dispute with this other Realtor.

Unfortunately, though, you characterized this other Realtor’s refusal to pay your requested compensation as a “refusal to cooperate.” This was not a correct assessment of the situation. And regrettably, you assumed and made statements to the homeowner that this other Realtor does not cooperate with other brokers.

Article 15 says: Realtors® shall not knowingly or recklessly make false or misleading statements about other real estate professionals, their businesses, or their business practices. (Amended 1/12)

By your own admission, you didn’t have personal knowledge of this other Realtor refusing to cooperate with other brokers. You assumed that since they failed to pay you the requested commission, they likely do the same with other brokers. This goes back to thinking that the other Realtor’s failure to pay your requested commission is the same as not cooperating with you.

Even though this other Realtor didn’t pay your requested compensation, they did, in fact, cooperate with you.

Then, on top of confusing cooperation vs. compensation, you made statements to the homeowner that were, by your own admission, just assumptions that this other Realtor refuses to cooperate with other brokers. Saying that this other Realtor doesn’t cooperate with other brokers because they didn’t pay you a commission in the past, was, at the very least, making misleading statements to the seller about this other Realtor.

I would not be surprised if you’re found in violation of Article 15. Hopefully, however, you’ll see this as an opportunity to become better educated on the Code of Ethics.

Shannon Allen is an attorney and Florida Realtors Director of Local Association Services
Note: Advice deemed accurate on date of publication

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